$PM (Philip Morris International, Inc.)

$PM said that its FY15 outlook includes incremental spending in 2015 vs. last year in support of the company's Reduced-Risk Product, iQOS, including accelerated spending behind planned national expansions and city launches in 2015 and 2016, and to further reinforce the favorable momentum of its cigarette brand portfolio.

Tobacco giant $PM declared a quarterly dividend of $1.07 per
share on its common shares, raising the annualized dividend rate by 2.9% to $4.28
per share. The dividend is payable on October 12, 2017, to shareholders of
record on September 27, 2017.

$PM is all set to embark on a transformation by shifting its
business to smoke-free products. According to the company’s sustainability
report, the focus will be on replacing cigarettes with smoke-free products. This
year, Philip Morris intends to allocate over 70% of its global R&D expense
and 30% of commercial expenditure to smoke-free products.

$MO, which competes with $PM and $BTI, reaffirmed its 2017 adjusted EPS guidance of $3.26-3.32. This range represents a growth rate of 7.5-9.5% from an adjusted diluted EPS base of $3.03 in 2016. $MO still sees 2017 effective tax rate on operations of about 36%. $MO still expects higher adjusted diluted EPS growth in 2H17 compared to 1H.

$PM said it remains on track to expand further into key international
markets. The company continues to forecast operating cash flow of about $8.5Bil
and capital expenditures of $1.6Bil for 2017. Going forward, the main focus will
be on unblocking supply chains for Japan, a key market for Philip Morris.

$PM expects total shipment volumes to decline 3-4% in the
full fiscal year, broadly in line with last year. Overall performance in the
international markets will remain muted in the coming quarters, due to unfavorable
exchange rates. Currency-neutral net revenues are seen rising 7% this year.

$PM currently expects full-year 2017 EPS to be
between $4.78 and $4.93, at the existing exchange rates. Adjusted for currency
impact and other items, the projected EPS represents a 9-12% YoY increase. The
company forecasts a net revenue growth of above 7% for 2017, excluding excise taxes and other items.

$PM plans to invest about $320MM in a new high-tech facility in Dresden, Germany, to produce HEETS, the tobacco units to be used with the electronic tobacco heating device IQOS. Construction of the 80,000 m2 facility is scheduled to begin in late 2017. Once fully operational in early 2019, the factory is expected to employ about 500 people.

$PM holds firmly to its conventional business in markets where
it faces pressures of any kind. Italy is slightly complicated because the
company has been focusing on the combustibles business while also building the base
for the IQOS business. The tax structure in Italy is not supportive for
narrowing the price. Germany and France are strong.

$PM stated that there were some price increases but there was
nothing exceptional during 4Q16. The company believes the pricing was
relatively the same across segments in absolute terms in the majority of
markets so there were no pricing gaps.

$PM said in Russia, there was higher inventory but the reaction
to price rollouts in the markets was normal. The company expects some of this
to unwind during 2017. IQOS volumes versus the combustible volumes in Japan is hard
to predict so there might be some temporary disallocation of inventories due to
sales.

In Japan, $PM’s 2016 cigarette market share declined by 0.4
points to 24.9% due mainly to the impact of HeatSticks. The company’s combined
market share including cigarettes and HeatSticks increased by 1.7 points to
27.1% in 2016 and by 3.1 points to 28.3% in 4Q16.

$PM said its expects it FY17 reported diluted EPS to be in the range of $4.70-4.85. Excluding unfavorable currency impact, reported diluted EPS is projected to increase by approx. 9-12%. The company expects net revenue growth to be in the range of 4-6%.